While Netflix has not yet fundamentally altered the face of television, it has certainly expanded the definition by offering creators a new playground in which to experiment and by pushing the boundaries of what is considered commonplace. Since its inception, Netflix has been changing the ways that viewers access, control, and watch television.
Founded in 1997 by Reed Hastings and Marc Randolph, Netflix began as a mail-order DVD service. Instead of going to a local store like Blockbuster, Netflix delivered entertainment right to your door. While Blockbuster offered customers the ability to obtain new releases on-demand, Netflix capitalized on a separate, undervalued part of the market. By appealing to the desires of customers who didn’t need their movies immediately but would prefer the convenience of delivery and the cost-effectiveness the company provided in comparison to Blockbuster, Netflix carved out its own share of the in-home entertainment market. Fast-forward two decades later, and Netflix is now a 21st-century staple. Ten years after delivering its billionth DVD, Netflix expanded into internet video-on-demand, which offered a revolutionary way of watching TV (CITE). Instead of airing episodes weekly, viewers could consume an entire season in one sitting, which has come to be understood as ‘binge-watching’.
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However, while they were doing exceptionally well at the time, they quickly realized the limitations of the design of their platform. Because none of the content they were streaming belonged to Netflix, they were paying the original network for each show and movie, and there was no guarantee that they would have the rights to stream everything forever. One prominent, recent example of this is ‘The Office’, which used to be available on Netflix, but the liberties have recently been taken away, and now it can only be streamed on Hulu. In response to this curb, Netflix expanded from just a streaming platform to becoming the creator of original content.
The first attempt was the Netflix original series ‘House of Cards’, which passed with flying colors. This success was of no surprise to the company, as the show was entirely created out of data that indicated there would be a consistent, loyal audience for it. As suggested by this example, much of Netflix's success derives from its ability to leverage big data. Before streaming services like Netflix, networks had a monopoly on television. In the words of Kevin Reilly, former chairman of Fox News, “if you wanted to do television, you were coming to network television first” (SSS: BDFE). Networks were the golden ticket to success. But the advent of Netflix allowed creators to sidestep the control and restrictions imposed by networks. ‘Traditional television’, which refers to linear platforms such as broadcast networks, basic cable channels, and premium cable networks, had to comply with specific rules and regulations. These linear platforms are restricting because their shows are distributed, often weekly, through time slots on a live schedule. Broadcasters are limited to a standard broadcast schedule that meets the needs of all of their viewers; thus, they cannot play 13 hours’ worth of one show as that would crowd out all of the network’s other programming for the day (SSS: BDFE). Structurally, television shows have to fit into precise 22- or 44-minute chunks, depending on whether the show will be broadcast in a 30-minute or 60-minute slot (CITE). Within these slots, the writer has to build in time to refresh viewers of plot elements from previous episodes aired a week prior, as well as time in the middle for commercials. Lastly, they also need to include 'mini cliff-hangers' to keep the audience on edge so they will be back for next week's episode (SSS: BDFE). But before writers can even make it to this stage, they are required to have their pilot episodes approved. Television networks rely on pilot episodes to determine whether there is an audience for a show. Creating a pilot episode is not easy; not only are they expensive, but they also require the writers to introduce and develop the show's characters, plot elements, and story arc in a 30- or 60-minute broadcast time slot (SSS: BDFE). If the network likes the pilot, they might initially order six to twelve episodes, but even then, there’s no guarantee that the series will go any further. The networks maintain control over shows, giving the creator’s little creative liberty, and if the show does not succeed off the bat, then they have no problem cutting it off.
Recently, Netflix conducted a study using its data to detail how long it takes audiences to get hooked to different shows. Certain shows, such as ‘Breaking Bad’, have a majority of its viewers hooked after two episodes, while ‘Arrow’ took around eight episodes to get the same results. If ‘Arrow’ was only given the chance to succeed in six episodes, it would not have made the cut, which represents a crushing blow for the manner in which Network Television packages its product; not a single show’s hook point was its pilot. These statistics suggest that networks’ dependence on pilots to predict a show’s future success can be a risky process, and that streaming services have a unique edge with viewers because of their ability to disseminate entire shows at once.
It is also important to note that not all content is created equally. Not only are Network television writers and producers limited by time constraints they are also regulated in terms of the actual substance of their shows. Series that air on cable television are held to traditional censorship guidelines, while content that streams online is, for all intents and purposes, a free for all. Streamed content may expose viewers to an explicit nudity or a gory bloody battle at any moment and it can be this risqué touch that draws us in.
As the number of avenues for programming has grown, creators have several distribution options, each offering varying degrees of creative freedom and autonomy. Programs aired on TV are regulated by industrial, organizational, and commercial factors that have a substantial impact on artistic freedom. The FCC has long regulated broadcast television, censoring any content it determines to be obscene, indecent, and profane. Although the Television Code of the National Association of Broadcasters has been dissolved, much of their regulations are set (such as the prohibition of profanity, drunkenness, and the irreverent portrayal of God), and continue to persist within the networks’ individual standards and practices departments, limiting to this day what can and cannot be shown on broadcast television. In 1996, government pressures resulted in the establishment of a content rating system, which grouped programs into categories that ranged from TV-Y (appropriate for all children) to TV-MA (mature audiences only). Basic cable, which is not subject to regulation from the FCC, is still restrained by guidelines and expectations.
Netflix, free of commercials and regulation, allows and even encourages nudity, profanity, and violence, often using these attributes as a way of differentiating itself from broadcast and basic cable. One component of streaming services’ branding is their tendency to push boundaries in ways that other networks cannot. Netflix's approach to programming is to give virtually free reign to creators. Across broadcast, cable, and streaming, each network approaches the production of a series in a way that is unique to the preferences and priorities of that individual service (CITE). These methods and practices can have varying implications on the creative freedoms of their respective programs. Furthermore, no-ad breaks and binge-watching capabilities aren't just making TV more convenient; they're changing the ways television's stories are told. Allowing viewers to watch one episode after the next with no interruption has given writers the liberty to do much more with their stories. With more time to spare, writers can develop characters on a deeper level, leaving viewers hooked long after they watch the last episode. Additionally, writers don’t have to worry about building up suspense before and after commercial breaks, but rather they get to leave their cliff-hangers for the last few seconds of the episode, tempting the viewer to continue watching the next episode, and the next, and the next. Because viewers can watch one episode after another, a higher degree of narrative complexity is achievable.
Additionally, not every show has to appeal to every subscriber. Because Netflix provides an on-demand streaming platform with a library of a plethora of different options, it can risk offending individual subscribers with the content in some of those options (SSS: BDFE). In the world of broadcast networks, you can deliver only one show at a time to your audience, so that show theoretically has to appeal to as many viewers as possible. Conversely, if a Netflix subscriber is turned off by a gruesome scene or an inappropriate comment, he or she can “choose from more than 100,000 hours of other Netflix content” (SSS: BDFE). To build its subscriber network, Netflix makes use of the ‘long tail’ theory by diversifying its portfolio and licensing a huge library of content that targets niche demands. Because of the wide array of options, each show can have more specialized markets with a distinct voice and a loyal fan-base instead of mass appeal. For decades, the ‘Big Three’ broadcast networks, ABC, CBS, and NBC, dominated American television. During their reign, television was a mass medium; most programs aimed to appeal to the entire television audience. As the gamut of entertainment outlets has expanded, and barriers to entry have dwindled, the ways in which television audiences are divided, as well as how scripted series are created, distributed, and received has drastically changed. Consequently, Netflix commissions and delivers its scripted series to many different ‘small-but-loyal’ audiences. Netflix’s head of original content Cindy Holland stated, “I don’t think any genres are off-limits to us. We have a large subscriber base that consumes a wide variety of content...We hope to reach the entire subscriber base with at least one original series”. Ted Sarandos, Chief Content Officer of the company, advances this concept of a boundless brand identity by insisting, “I’m not looking to find a single show to define Netflix. That’s almost the opposite of what we’re trying to do. Our brand is all about personalization”.
The goal is not to target one audience or one interest, but to allow each individual user to have the experience that he or she wants. As a result of taking place entirely on the Internet, Netflix streaming collects every viewing habit of a viewer and uses this online data to create the ultimate viewing experience. Utilizing data, Netflix has pushed this idea of personalization to the next level. Consumers want products that are easy to use and tailored to fit their personal preferences. Unlike the media moguls of the traditional entertainment industry dictating national tastes, with Netflix, the consumer is deciding “what they want, when they want it, and how they want it” just by using the platform. The more you watch, the more Netflix learns your tastes (Mcconnell, Jos ; Windsor, Ont). Netflix uses “what people watch, when they watch, how much do they watch, what time of day, on what device, what they watch (before or after) and on what profile” in order to determine what content to put in front of what person at what time (Mcconnell, Jos ; Windsor, Ont). Instead of relying on the general preferences of even the metrics people might choose, Netflix relies on the behavioral choices of users. While one might explain themselves as being an action film junkie, if he or she watches ‘The Notebook’ 5 times in one week, how much value does that statement hold?. Based on these viewing patterns, ‘everything is a recommendation’. Each individual has his or her own profile highlighting shows already watched as well as recommendations based on these preferences. Essentially, each person has a TV channel created just for him or her; no two Netflix profiles are the same. Netflix is, quite literally, a continuously learning machine. Not only has this data been integral in creating ideal user profiles, but it has also contributed to the success of original content by providing insight into what works and what does not in a show, so that they can continuously iterate within their constant cycles of content publishing.
Traditional entertainment authorities do not have the luxury of a direct relationship with their consumers. Nielsen ratings provide incumbent television networks with the general characteristics of viewers from company estimates and other surveys, but they rarely know who their viewers are as individuals; even if they do, there is no easy way for them to promote content directly to those consumers (SSS: BDFE). The closest networks can get to effectively targeting an audience for a new show is to promote it alongside a similar established show (SSS: BDFE). Since 1950, The Nielsen Company, a marketing research firm, has been measuring television audiences and tracking progressions in viewership over time. Programmers and advertisers have been using Nielsen ratings for decades to evaluate their successes and failures, as well as to observe significant trends and phenomena. However, as new technologies have emerged and viewing behavior has evolved, through concepts such as time-shifting and mobile viewing, a single airing is no longer representative of a show's actual audience size. Instead, traditional entertainment authorities' decisions are based on long-established patterns rather than direct insight, and typically, these conventions lead to unfavorable choices.
One characteristic that separates Netflix and other streaming services from traditional television outlets is that their series are delivered exclusively over the Internet, giving streaming networks access to vast amounts of data on viewing behaviors and trends that can be used to inform programming decisions. Because other networks rely on third-party platforms for mass distribution, they do not have the same level of access to data collection. In 2013, Netflix became the first streaming service to be nominated and win a Primetime Emmy Award for its web-only original series, ‘House of Cards’. This consequently shook up of the entertainment industry, but this win came as no surprise to the company. Before even seeing a single episode of House of Cards, Netflix committed to two seasons—or 26 episodes—of the show. They did so without hesitation, claiming, “We know what people watch on Netflix, and we’re able with a high degree of confidence to understand how big a likely audience is for a given show based on people’s viewing habits”. Netflix originals are not tailored to a demographic the way Network TV operates, but rather are based around what you supposedly want. So, if you’re not happy with the most recent series of ’Orange Is The New Black', then arguably, you’ve only got yourself to blame really.
The key to streaming success is identifying overlapping patterns of data. Utilizing data, analysts can identify whether audiences might exist for a combination of a producer, their writing style, a particular genre, specific cast, or some other trait of the show. It is not a matter of merely identifying people who have watched a specific show or enjoy a particular actor, but rather 'to figure out what everybody who liked ’Benjamin Button', ‘Seven’, ‘Fight Club’ and ‘Social Network’ has in common. It’s that they love David Fincher’s style of storytelling ... .You look at Kevin Spacey fans, and then you say, ‘How about people who love political thrillers?’ We went back and pulled all the political thrillers people have watched and rated highly. So you've got all these populations, and right, where they overlap in the middle, is the low-hanging fruit. If we can get the show in front of these people, they will watch it and love it'. (NETFLIX PRIZE). Big data has not only helped shape content to embody audience preferences, but it has also informed the most effective means for marketing this content. Once Netflix has learned customers’ preferences, they market products directly to customers on the basis of this data, giving them a distinct edge over networks that rely on drawn out timescales and third-party insights. Not only can Netflix directly measure the effectiveness of different promotional strategies, they can also design specific promotional campaigns for different types of customers (SSS: BDFE). For example, before releasing ‘House of Cards’, they created multiple trailers for the show. One featured Kevin Spacey (for subscribers who had likes Spacey’s movies); another featured the shows female characters (for subscribers who looks movies with strong female leads); yet another focused on the cinematic nuances of the show (for subscribers who had liked Fincher’s movies) to ensure they attracted all possible target audiences. Through their inherent flexibility, control of their content, and innovations in the viewer experience, Netflix has carved out a more than significant stake in television and movie consumption. While there will likely always be a sect of the market that yearns for the classic movie theatre experience or genuinely enjoys having their Tuesday nights dedicated to their favorite show, Netflix has provided a much sought after outlet for those who prefer refreshing, personalized content viewed on their own schedule.
Having evolved in a near parallel manner to their clientele’s demands, Netflix has been able to keep up and at times outpace competitors and their own viewers, which explains much of how and why they have seen continued growth over the past decade despite turning the company’s mission statement on its head. While the market will continue to evolve with the introductions of new streaming services and innovations in the market, Netflix will almost certainly be right in step with its new competition, as it is important to remember that Netflix's success is not predicated on capitalizing on any singular trend, but rather on their ability to effectively adapt and iterate continuously. For these reasons, it is hard to foresee a scenario in the near future in which Netflix is overrun or outdone by any one competitor. More often than not, it is Netflix setting the tone for the competition.
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